Mylan CFO: Deleveraging strategy unaffected by share-repurchase plans

By Jennifer Lanning Drey

Savannah, Ga., May 3 - Mylan Inc.'s deleveraging strategy will be unaffected by its newly announced $350 million share repurchase program, chief financial officer John Sheehan said Tuesday during the company's first-quarter earnings conference call.

Mylan's goal of achieving a gross debt-to-adjusted EBITDA ratio of about 3 to 1 remains intact, Sheehan said.

"Additionally, because of our proven ability to generate strong cash flows, we will remain in a position where we have adequate financial resources available for the right business development opportunities," he said.

Mylan announced Tuesday that its board of directors approved the repurchase of $350 million of the company's common stock and other equity securities, either in the open market or through privately negotiated transactions.

The company plans to use cash on hand to fund the share repurchase program and expects to complete the program by the end of the second quarter, the CFO said.

Mylan had $640 million of cash and marketable securities as of March 31.

The company's next significant long-term debt maturity is $600 million of convertible notes due in the first quarter of 2012. Mylan intends to repay the convertibles using available cash at that time, Sheehan said.

Revenues, EBITDA improve

Mylan reported total revenues for the first quarter of $1.45 billion, up from $1.29 billion in the first quarter of 2010. The company said revenues in the 2011 quarter were favorably impacted by the effect of foreign-currency translation. Translating total current-year revenues at prior-year exchange rates would have resulted in year-over-year growth in total revenues excluding foreign currency of $141 million, or 11%.

First-quarter EBITDA was $334.6 million, up from EBITDA of $323.0 million in the prior-year quarter.

GAAP cash flows from operations showed a use of $46 million for the first quarter, which Sheehan said was primarily the result of the timing of payments, including interest on bonds and annual incentive compensation payments, combined with an increase in accounts receivable due to higher sales and the timing of collection of cash receipts and an increase in inventory in response to anticipated demand.

Mylan is a Canonsburg, Pa.-based generic and specialty pharmaceutical company.

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